The World of Medical Necessity Turned Upside Down
Posted June 2017
The original concept of medical insurance did not differ much from other forms of insurance. One would purchase a policy that would help cover unexpected expenses. The relationship between the patient and the healthcare provider was an entirely separate entity.
Over time, the insurance companies developed networks and contracted with providers directly and began the process of setting reimbursement rates. This was true in the physician’s office and healthcare facilities as well. Once the insurance companies started gathering vast amounts of data on their reimbursement and costs began to rise, they implemented utilization management programs of their own to reduce their outlay. Presently, individual patients often have their own “case manager” assigned to them to ensure they are getting the appropriate medical screening, vaccinations and follow-up.
Virtually anyone under the age of 35 have never known life without an insurance mandated medication formulary. Insurers have contracted with large distributors, negotiated prices and incentivized providers and patients to opt for cheaper alternative drugs. Frequent changes in formularies or pharmacy distributors have often led to wholesale changes of a patient’s medication regimen. More frequent visits to the doctor and high levels of frustration have been part and parcel of this the strategy.
Insurers have also employed the prior authorization technique to create barriers to obtaining care that has been ordered by a healthcare professional, but is deemed too expensive or unnecessary. Many providers have added staff and spent significant amounts of time to do battle over the necessity of MRI’s or medications. Endless and repetitive forms are required to obtain basic testing supplies for diabetics and the like have detracted enormously from the joy of practicing primary care for many providers.
Still, one can (to some degree) understand the need to avoid fraud and waste that has resulted in increased healthcare spending. In an era in which a victory is declared when the rate of healthcare spending not quite as bad as the preceding year, everyone in healthcare must take their lumps in the effort to reduce cost.
However, what has been occurring most recently seems to cross a dangerous line. Insurance companies have now begun to dictate to hospitals how they should bill for care.
This started somewhat innocently. Patients were required to contact their insurance company when they were admitted to the hospital. Presumably, to ensure that they could manage the care of the patient in facility that was contracted with the insurance company. If not, the patient could be transferred or out-of-network payment could be arranged. Quickly, this responsibility was shifted to the facility. Business office staff or hospital case managers would be required to make the contact with the insurer. Insidiously, this has evolved to the point where the insurers require a review of the clinical scenario, copies of records, labs and imaging studies. They will then decide if they will cover the hospitalization and dictate the patient’s status. The options being “Observation” in which the overall reimbursement to the facility is much less and the patient bears a larger portion, or “Inpatient” which is the more traditional reimbursement.
Insurers are increasingly denying payment upfront (pre-payment denials) if they feel the patient was placed in the wrong category. The hospital literally gets no reimbursement in spite of providing appropriate care. To avoid this, many facilities will now simply accept the category (or status) that the insurer dictates. So now the situation is that the patient may present to the Emergency Department of hospital. The physician decides the patient is in need of hospitalization. A hospital case manager will review the case with the insurance company and be instructed on the status. In most cases, the hospital simply complies.
This appears to the classic “tail wagging the dog” scenario. Insurers are no longer providing a financial safety net to clients. They are at every level of that client’s care. They are dictating much of the care choices either directly or by indirectly placing the provider in a maze that only leads to the decision desired by the insurer. Providers who fail to comply are faced with endless delays, tasks and denials. Although providers can typically win in the end, the insurers are counting on them giving up the fight long before then. There are too few providers and too few hours in the day for most to stay engaged in the process to fruition.
In many instances, this has occurred in such a manner that it has simply become the way things are done. The standard operating procedure. However, it is a dangerous precedent. Hospitals and healthcare providers should be pushing back. It is the providers who understand the clinical scenario best. It is the physician who knows how sick the patient is and what will be required to treat them. The provider should be making decisions on issues like patient status and facilities should bill it appropriately. Insurance companies that deny out of hand should be confronted through state insurance boards and not given a pass.
Healthcare providers have long felt they had the support of their patients and the population at large. They are well-meaning and have the patient’s best interest at heart, so why would they not be supported? The challenge is that the general population does not understand the plight of the provider. It is a deliberately complicated system, often left deliberately vague to allow the insurers room to justify denials. Providers, both physicians and hospitals, must be willing to draw some lines in the sand and stand firm or this evolution will transform to the point they will no longer recognize it as the medical field most providers sought to pursue.